2/23/2015 1 Introducing Value-Driven RM How to make a better argument for returns on compliance investments Jeffrey F. Driver, JD, MBA, ARM, DFASHRM CEO, The Risk Authority, Stanford DART Stanford Risk Assessments PEARL Clinical Coding Risk in Residency Program VDERM Consulting Safe Patient Handling Physician Peer Support Loss Prevention Strategies Risk Education The Risk Authority - Stanford
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2/23/2015
1
Introducing
Value-Driven RMHow to make a better argument for returns on compliance investments
Jeffrey F. Driver, JD, MBA, ARM, DFASHRM
CEO, The Risk Authority, Stanford
DART Stanford Risk Assessments
PEARL Clinical Coding Risk in Residency Program
VDERM Consulting
Safe Patient Handling
Physician Peer Support
Loss Prevention Strategies
Risk Education
The Risk Authority - Stanford
2/23/2015
2
Learning Objectives
• Discover a total value methodology for assessing risk investments
• Explain the “upside of risk”
• Describe how to evolve from traditional RM to ERM to VDERM
• Explain how decision science and design thinking can take compliance
mitigation programs to the next level
• We are all risk managers
• Competing priorities
• Upside of Risk
• We need a total value approach
Context
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1. What is VDERM?
RM -> ERM -> VDERM
2. How does it work?
Tools & Processes
3. Case Study
Identify, Assess, Evaluate, Mitigate, Monitor
Agenda
What is VDERM?
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A Total Value Mindset
Total Risk Program Value
Downside Risk
Value Protection
“Upside” Risk
Value Creation
The Goal
Total Stakeholder Value
Increase Value
Reduce Risk
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Total Value Tools
Downside only Total program value (Downside + Upside)
• Builds on the “core” of Traditional & Enterprise Risk Management
• Uses data and decision science in the risk process to create risk intelligence.
Value-Driven Enterprise Risk Management
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How Does VDERM Work?
VDERM Tool Kit
ERM
ISO 31000Decision Science Design Thinking
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ERM ISO 31000
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Decision Science
Alternatives
Information
&
Beliefs
Values
&
Preferences
Logic &
ReasoningOutcome
Dialogue Decision Process
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Helpful
Frame
Clear Values
Useful
Information
ReasoningCommitment
to Action
Alternatives
Decision Quality Framework
Design Thinking
A human-centered, iterative process for innovation and problem
solving that balances both analytical and creative thinking.
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Governs physician referrals and payments for those practices.
Case Study: Stark Law
Figure out what types of future events might prevent
or slow the achievement of objectives or enhance
the prospects of success.
Identify
Value Protected & Value Protected & Value Protected & Value Protected &
Value Created Value Created Value Created Value Created
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• Prioritizes to focus resources
• Focuses on what needs to be fixed
• Identifies who is involved
• Supports resourcing solutions
Identify: The Model Methodology
Data
Data Mining
Insight
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Risk Register
Decision Hierarchy
Policy Decisions
“Focus on” Decisions
Tactical Decisions
“Givens” that have
already been decided
Decisions that should
be the focus of analysis
Program particulars
that can be decided
later
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Determine which risks are most critical and
how individual risks are related to each other.
Assess
Value Protected &
Value Created
Heat Map
IdentifyIdentifyIdentifyIdentify
AssessAssessAssessAssess
Imp
act
Imp
act
Imp
act
Imp
act
LikelihoodLikelihoodLikelihoodLikelihood
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Value Map
Create High Quality Alternatives
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Design Process
Inspire Implement
Ideate
Alternatives for Stark Law program:
• Software
• Training
• Consultant
• Do nothing
Case Study
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Strategy Table
Alternatives Element 1 Staffing Element 3 Quality and
Cost Position
Marketing
Strategy
Software Current 1 FTE 2 FTEs Quality and cost
leadership
Sell quality and
influence market
growth
Training Close #1 5 FTEs 0 Improved quality
higher costs
Consultant
Current
Sell Quality
Current
CurrentDo Nothing Value added
specialties only
Minimal quality
improvements
Decide which risks need to be
addressed and evaluate and compare
outcomes.
Evaluate
Value Protected & Value Value Protected & Value Value Protected & Value Value Protected & Value
Created Created Created Created
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Modeling & Analytics
Evaluation
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Waterfall : CFO Diagram
Decision Quality
Decision
Quality 0% 100%
1. Frame
2.
Alternatives
3.
Information
4.
Values
5.
Reasoning
6.
Commitment to
action
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Deploy strategy to reduce risks
at the top of your list as well as
steps to increase potential benefits.
Mitigate
Value Protected & Value Protected & Value Protected & Value Protected &
Value Created Value Created Value Created Value Created
Prototype & Launch
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Advanced Project Management
Determine if your risk management process
has been effective.
Monitor the timeliness and effectiveness
of the various steps to reduce risks
and boost gains.
Monitor and React
Value Protected & Value Protected & Value Protected & Value Protected &
Value Created Value Created Value Created Value Created
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Evaluation
Iteration
Implementation
Inspiration
Ideation
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SHC Experience
The graph shows Stanford loss rate
vs Aon HPL Benchmark Teaching
Hospitals Loss rate.
Red represents the total loss rate
for Stanford.
Blue represents the total loss rate
for Aon HPL Benchmark.
Loss Rate = Ultimate loss at $15M
divided by Occupied Bed
Equivalents
More information
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Summary
• VDERM is a total value methodology for assessing risk investments
• VDERM builds upon traditional RM and ERM
• VDERM enables you to capture the “upside of risk” while
simultaneously managing enterprise-wide downside risk
• Decision science and design thinking powers the evolution from
traditional RM to VDERM
Questions
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